If I had a dollar for every time I've heard that making the business case for an SAP EEC to S/4HANA conversion doesn't stack up then I'd be long since retired. It is the top of mind issue that user groups point up each year in their customer surveys.
Check in with EISA, which uses buying power that stretches across over 100,000 suppliers to provide 'pass through' product at cost while ensuring that stores replenishment is faultless.
IESA, a procurement outsourcing business that blends into its customer operations, delivering operational excellence is an excellent example of how SAP customers can think forward, anticipating benefit.
IESA had successfully run an ECC6 FPO system but discovered that the system became a constraint on penetrating global markets, at a time when it was opening up operations in Sweden and Slovakia.
The business's high volume throughput and customer profiles meant that there are only two times a year when it can run a cutover - Christmas and Easter. Miss one or other and the project fails. In the event, the company only had four days in which to do the ECC to S/4 cutover. That got my attention at this year's iTelligence event.
IESA started out with SAP in 2002, at a time when it was a tiny business turning over around £1 million pa. At the time it was the smallest company to take on SAP's ERP but it wanted SAP's brand recognition to help lift it in market penetration. That worked. Fast forward to today and IESA ships around £300 million in goods and services although the vast majority of that revenue is in their capacity as an agent rather than principal. It guarantees to add value to its customers' bottom line as illustrated below.
As noted above, ECC was holding the firm back and in the second half of 2018 it set out to scope and roadmap a S/4HANA project. That led to the development of a project plan designed to run a conversion to S/4HANA over a five month period.
Why do a conversion?
During the presentation, Sean Baker who led the project for iTelligence was joined by Andy Perry, CFO IESA. Both speakers made clear under what circumstances a conversion makes more sense than treating the project as a greenfield implementation. Perry said:
The outcome we wanted to achieve was one where users would go home on Thursday and return the following Tuesday and nothing would have changed from their perspective. But from our standpoint, we needed to get real-time information to help us avoid lengthy overnight batch report runs for our customers. Those same customers are moving to real-time and we had to move with them or risk losing the ability to expand globally.
That presents many advantages because it means the project is tightly constrained. IESA cited:
- No activation of SAP best practices (not required)
- No change to current functions (keep same)
- Existing configuration can be migrated
- Data migration achieved using SUM tooling
- Minimal change management
- Speed to enabling platform
At first blush you might think - what's the point? Would it not be better to rethink processes from the ground up rather than a lift and shift? But then you have to come back to what IESA sees as both the current and future environment under which it operates - real-time to drive new efficiencies for customers in indirect procurement with the promise of fresh capabilities into the future.
This makes sense, While many of my colleagues believe that a cloud shift is an opportunity to rethink, from IESA's perch, the conversion provides enough promise to allow it to meet its future targets of expansion at a time when it is still an SME in global terms.
That, however, does not get anyone off the hook. As customers know, lift and shift sounds fine on paper but it is a reimplementation of sorts with all the potential pitfalls and hazards that accompany such a move. Having just completed our own conversion and transition, I completely understand IESA's rationale.
How it works
Since the scope of a lift and shift conversion is much more limited in scope than your typical greenfield implementation, it is much more technical in nature with limited change management among users. That allowed IESA to take advantage of iTelligence's offshore Conversion Factory. Even so, in this case, there was an aggressive timetable that could not fail.
On the migration path slide presented to the audience, I counted 36 workstreams across the four vectors of prepare, explore, realize and deploy. That's a LOT of work but the manner in which the team iterated and worked through the migration process was key to success.
How do you cope with that?
Focus, focus, focus, a relentless attention to detail and ensuring that learnings from each iteration are applied in subsequrent iterations
said Perry. I should add that throughout the presentation, Perry called out the project lead for the work she put in. Again, why am I not surprised at these 'soft' qualities?
Of course, there's a significant technical component but the longer I listened the more obvious it became that in the end, these projects are down to running a carefully orchestrated and highly disciplined operation over which the client - in this case IESA - maintains project ownership and does not schlepp off responsibility to the SI.
But at the same time, it also meant ensuring that the SI worked in true partnership fashion. For example, at one point they discovered a piece of essential work that required 15 days development. They only had five days available on the critical path. Using the Conversion Factory and communicating in pristine fashion got it done.
As a side note, IESA used an internal social media platform for communication. I didn't get the details but that mirrors something of my own recent experience. I'm not 100% convinced that is THE way to proceed in these cases but I am seeing more creative usage of this method as a way of both organizing and actioning project steps.
How often do you hear this from a happy customer?
We came in on time and under budget
Earlier in the day, I met with one of the IESA team for an informal chat and it was clear to me that their S/4HANA project wasn't only a success but a joy. She said:
Each time we iterated we could see that we made progress and that the system would be operationally improved. It's something you can't know when you go on this type of project for the first time but getting those early successes had a significant positive impact and left us confident in our ability to deliver.
SAP has positioned S/4HANA as a platform for the future, something IESA clearly sees as valuable. Lift and shift may not sound sexy, or, for that matter, particularly interesting but you have to see this in context. IESA had that context but it will be up to individual firms to decide which future path is right for them. Regardless of those considerations, the triple mantras of focus, detail and ownership are clearly the keys that unlock success.
Does that mean everything goes as anticipated? Absolutely not but if your upfront planning is purposefully undertaken with a clear goal in mind and in partnership with an SI committed to your success then you will significantly derisk your S/4HANA project.